TMI Tax Updates - e-Newsletter
September 26, 2015

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

TMI SMS

• Anti-dumping duty cannot be imposed on imports during gap period between the expiry of provisional notification and final notification - SC

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• Scheme of arrangement - to gift its shares in TAAL to its Shareholders - Income Tax Proceedings were pending - the Scheme is illegal - HC

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• Penalty - late payment of Sales tax - previous conduct of dealer is not an irrelevant factor in deciding discretionary levy of penalty - HC

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• Import of goods in hand baggage by its employees without declaring the same - Duty can't be raised on Appellant as it doesn't own goods -Tri

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Articles

1. SERVICE TAX ON DIRECTOR’S REMUNERATION-INSTIGATING LITIGATION!

   By: Pradeep Jain

News

1. Finance Minister Shri Arun Jaitley Stresses on Capital Increase and the need for Voice Reforms in the World Bank so as to Reflect the Emerging World Order in its Governance; Ms. Sri Mulyani Indrawati, Managing Director, World Bank Group Calls on the Finance Minister and Assures Support of the World Bank Group to Partner India’s Development Strategies Through Delivery of Diversified Programmes of Financing, Knowledge Exchange and Capacity Building

2. Central Government has Decided to Provide Further ‘Special Assistance’ of ₹ 1000 crore to State of Andhra Pradesh During the Current Financial Year 2015-16 Including ₹ 350 crore (@Rs. 50 crore per District) for the Development of 7 Backward Districts Covering Rayalaseema & North Coastal Region,

3. Regularisation of Assets held Abroad by Person Resident in India under FEMA, 1999

4. Mega Credit Campaigns are being Conducted all over the Country by Public Sector Banks (PSBs) from 25th September to 2nd October 2015 to not only Generate Greater credit to Micro Enterprises under the Pradhan Mantri Mudra Yojana (PMMY)

Notifications

Income Tax

1. 186/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Nishkam Sikh Welfare Council New Delhi

2. 185/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Vyakti Vikas Kendra India, Bangalore

3. 184/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Global Hospital & Research Centre, Mumbai

4. 183/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Smt. Ushaben Rasiklal Shaw Digvijay Lion Dardi Sahayak Trust, Ahmedabad

5. 182/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Sant Baba Bhag Singh Memorial Charitable Society, Punjab

6. 181/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Mar Pachomios Charitable Society, Ernakulam

7. 180/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Handicapped Children’s Parents Association, New Delhi

8. 179/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Medical Research foundation, Chennai

9. 178/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Nana Palkar Smruti Samiti, Mumbai

10. 177/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Smt. Parsanben Narandas Ramji Shah (Talajawala), Society, Gujarat

11. 176/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Blind Welfare Council, Gujarat

12. 175/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – School for Deaf Mutes Society, Ahmedabad

13. 174/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Gujarat Cancer Society, Ahmedabad

14. 173/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – ACIL Navasarjan Rural Development Foundation (ANARDE Foundation) Mumbai

15. 172/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Srikakulam Vayodhikula Sangham, (Srikakulam Elders Association), Andhra Pradesh

16. 171/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Udavum Karangal, Chennai

17. 170/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Ramakrishna Mission Students, Chennai

18. 169/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Vishranti critical cancer palliative care centre Pune

Highlights / Catch Notes

Income Tax

• Court Evaluates Assessee's Undisclosed Income and Confessional Statement Validity Amid Claims of Duress and Retraction.

  Case-Laws - SC : Undisclosed income - reliability of confessional statement - Whether the statement was made under duress and whether it was retracted lawfully would have no relevance at this stage - it is not possible to say that this is a case of no evidence at all inasmuch as evidence in the form of the statement made by the assessee himself and other corroborative material are there on record. - SC
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• Court Blocks Share Gifting Scheme in TAAL Arrangement Due to Ongoing Tax Issues; Deems It Illegal and Improper.

  Case-Laws - HC : Validity of Scheme of arrangement between the Petitioner and its Shareholders - Proceedings under Income Tax were pending - It will not be proper to permit the Petitioner Company to gift its shares in TAAL to its Shareholders as envisaged under the Scheme. The Court will not put its imprimatur on such a Scheme. - it is clear that the Scheme is illegal and contrary to law and hence cannot be sanctioned by this Court. - HC
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• Audit Findings Can Trigger Reassessment: Legal Grounds for Reopening Cases on Factual Errors or Omissions.

  Case-Laws - HC : Reopening of assessment - the audit party is entitled to point out a factual error or omission in the assessment and it is settled law that re-opening of the case on the basis of a factual error pointed out by the audit party is permissible under law - HC
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• Court Rules Against Extending ITR Filing Deadline: No Right Infringement or Prejudice Found to Justify Change.

  Case-Laws - HC : Extension of time for filing of ITR - If no right is infringed and no prejudice is found to be caused to the petitioner, merely because no prejudice would be caused to the respondents by extending the time for filing the ITR would not be a ground for interfering with the policy decision of the Government and granting such extension. - HC
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• Court Dismisses Plaintiff's Suit Against Tax Authorities for Lack of Evidence and Legal Basis Under Income Tax Act.

  Case-Laws - HC : The plaintiff has filed suit for recovery of damages caused by the act of income tax authorities. - The plaintiff has failed to prove that any illegal raid was conducted by the Income Tax Authorities and he has also failed to prove the damages suffered by him. - The Income Tax Act is a complete Code and no separate suit is maintainable. - HC
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• Conveyance Allowance Deduction u/s 10(14)(i) Requires Reimbursement of Actual Expenses for Tax Benefits.

  Case-Laws - HC : Additional Conveyance allowance - any allowance granted to meet the expenditure incurred on conveyance in the performance of duties of office or employment of profit shall qualify for deduction under section 10(14)(i) of the Act only when there is reimbursement of the expenditure actually incurred. - HC
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• TDS Not Applicable on Interest from FCCBs: Income Excluded u/s 9(1)(v)(b) and Section 5(2) of Income Tax Act.

  Case-Laws - AT : TDS u/s.196C r.w.s. 115AC on the interest payable on FCCBs - since income in question is squarely falling under the exclusion clause of income deemed to accrue or arise in India u/s 9(1)(v)(b) of the Act, it cannot fall within the ambit of income accrued and arisen in India, and hence, the same cannot be said to be covered u/s 5(2) - Since the income is taxable, question of TDS does not arise - AT
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• Keyman Insurance Policies: Tax Benefits Confirmed u/s 10(10D) of Income Tax Act for Various Life Insurance Types.

  Case-Laws - AT : Disllowances towards premium of keyman insurance policies - once it has been sold as a life insurance policy on the keyman to the business, as long as it is in the nature of life insurance policy, whether pure life cover or term cover or a growth or guaranteed return policy, it is eligible for coverage of Section 10(10D) - AT
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• Assessing Officer Misapplies Rule 8D(2) for Section 14A Disallowance, Fails to Justify Rejection of Taxpayer's Voluntary Disallowance.

  Case-Laws - AT : Disallowance u/s 14A read with rule 8D - Assessing Officer erred in invoking sub Rule (2) to Rule 8D, without elucidating and explaining why the voluntary disallowance made by the assessee was unreasonable and unsatisfactory. - AT
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• India-Singapore DTAA: Payments for design services in Singapore not subject to TDS, Article 12 inapplicable.

  Case-Laws - AT : TDS Liablity - fees for technical services - payment of rArchitectural services and Interior designing and Architectural services - Since, we have held that the payments made to Singapore parties are not in the ‘nature of royalties or fees for technical services’, no purpose would be served by referring to Article 12 of India-Singapore DTAA - AT
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• 99-Year Satellite Rights Transfer Not Classified as Royalty, Exempt from TDS u/s 194J of Income Tax Act.

  Case-Laws - AT : TDS u/s 194J - satellite right transferred in favor of assessee for a period 99 - transfer in favour of the assessee as sale and therefore, excluded from the definition of "Royalty" as defined under clause (v) to Explanation (2) of Section 9(1) of the Act - AT
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• Penalty for Concealed Income u/ss 271(1)(c) & 250 Applies Post-Return, Even for Belated Filings.

  Case-Laws - AT : Penalty under Sec.271(1)(c) read with section Sec. 250 - concealment of income starts only after the return of income was filed or subsequent to filing of belated return of income when the Department detects certain income as escaped - AT
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• Sections 194L and 194LA TDS Provisions Inapplicable: Land Always State-Owned, Compensation Only Removed Encumbrance.

  Case-Laws - AT : TDS u/s 194L/194LA - land always belonged to the State. It was only the encumbrance which was removed by the assessee by making payment of certain compensation - provisions of section 194L/194LA do not apply - AT
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Customs

• Supreme Court Rules Anti-Dumping Duty on Imports Between Provisional Expiry and Final Imposition Illegal.

  Case-Laws - SC : Whether anti-dumping duty imposed with respect to imports made during the period between the expiry of the provisional anti-dumping duty and the imposition of the final anti-dumping duty is legal and valid - Held No - SC
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• Customs Duty on Undeclared or Mis-declared Hand Baggage Applies Only to Passenger Acting as Importer, Not Appellant.

  Case-Laws - AT : Import of goods in hand baggage by its employees without declaring the same or by mis-declaring the value? - the demand for customs duty can only be raised against the passenger who was the importer and not against the Appellant. - AT
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• Penalty Imposed u/s 114A for MEPZ/SEZ Unit's Protocol Breach on Exempted Goods; Penalty Amount Reduced.

  Case-Laws - AT : Imposition of penalty u/s 114A - MEPZ/SEZ unit - Even if the goods are exempted the appellants should have followed the procedure for clearing the goods to DTA which apparently they have not done - Penalty to be levied though reduced - AT
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Corporate Law

• Court Rules Recovery Suit Invalid Due to Non-Existent Company at Filing Time; Incorporation Revoked and Later Restored.

  Case-Laws - HC : Maintainability of petition for recovery suit by the company who was not exiting at the time of filing of suit - its incorporation was revoked earlier and restored later - The petitioner was not in existence as on the date of institution. The petition was hence not maintainable. - HC
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Indian Laws

• Criminal proceedings ordered for missing public records; highlights need for accountability and transparency under legal framework.

  Case-Laws - HC : RTI - Missing public records - In view of the clear direction issued by the Second Appellate Authority, they were bound to set criminal law in motion as the documents could not be traced within the stipulated time. - HC
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Service Tax

• CENVAT Credit Denied for Outward Transportation Services from July 2006 to March 2007.

  Case-Laws - AT : CENVAT Credit - GTA service - whether during the period from 7/2006 to 3/2007 Cenvat Credit is admissible on service of outward transportation - credit not allowed - AT
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• Cenvat Credit Allowed on Inputs and Capital Goods for R&D and Quality Control Labs Within Factory Premises.

  Case-Laws - AT : CENVAT Credit - whether appellant is entitled to avail Cenvat Credit on inputs and capital goods used exclusively for R & D and Quality Control Laboratory situated inside the factory premises - Held Yes - AT
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• Cenvat Credit Allowed for Pest Control, Construction, Architect, and Security Services Used in Factories or Employee Housing.

  Case-Laws - AT : Cenvat Credit - input services - Pest Control Services, Construction of Residential Services, Architect Services and Security Services - these services availed either in their factory premises or in the Residential Colonies given by the appellants to its employees - credit allowed - AT
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• Refund Denied: Lack of Proof Linking Inputs to Exported Goods Under Notification No.17/2009-ST Conditions Not Met.

  Case-Laws - AT : Denial of refund claim - appellant failed to submit any proof to establish any nexus between the inputs and the fact of the goods exported and that essential conditions for availment of refund under Notification No.17/2009-ST were not fulfilled - No refund - AT
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• Refund for Export Services Approved: Physical Testing and Analysis Qualifies for Input Services Refund.

  Case-Laws - AT : Denial of refund claim - input services - export of goods - Physical testing and analysis would clearly include weighment and sampling also is based on certain physical or chemical characteristics - refund allowed - AT
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Central Excise

• Assessee accepts classification of Dipped and Rubberised Tyre Cord Warp Sheets, agrees to pay duty as per Department.

  Case-Laws - SC : Classification of (1) Dipped Tyre Cord Warp Sheet and (2) Rubberised Tyre Cord Warp Sheet - it is not even necessary to remit the case back because of the reason that the classification as made by the Department has been accepted by the assessee and the assessee is even paying the duty on the basis of the said classification - SC
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• High Court Overturns CESTAT Majority Order on Duty Evasion in Air Conditioner Manufacturing Case.

  Case-Laws - HC : Clandestine manufacture and removal of goods - impugned majority order of the CESTAT on the issue of clandestine removal of 606 ACs by the Appellant without payment of duty suffers from serious errors and, therefore, cannot be sustained in law. - HC
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• Ex-gratia Payment Approved for Duty Evasion Disclosure; Rs. 5,00,000 Set as Reward; Committee Decision Stands Unchanged.

  Case-Laws - HC : Reward for disclosure of evasion of duty - as per the guidelines, it is possible for the Department to grant an ex-gratia payment and ₹ 5,00,000/- was fixed as the ex-gratia amount - no need to interfering with the said finding of the Committee at this stage of the proceedings - HC
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• Court Denies EOU's Refund Claim for Unutilized CENVAT Credit on DTA Waste and Scrap Clearances, Affecting Exporters.

  Case-Laws - AT : 100% EOU - Denial of refund claim - Refund of unutilized CENVAT Credit - DTA Clearances of waste and scrap - If the stand of the department is accepted then no refund will be admissible to an exporter because every manufacture will result into generation of some waste and scrap which has to be cleared in DTA - AT
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VAT

• Sales Tax Penalty: Dealer's Past Conduct Influences Decision on Late Payment Penalties.

  Case-Laws - HC : Levy of penalty - sales tax was paid belatedly - discretion - The previous conduct of the dealer is not an irrelevant factor in deciding whether or not penalty should be imposed on a dealer. - HC
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Case Laws:

• Income Tax

• 2015 (9) TMI 1127
  Undisclosed income - reliability of confessional statement - Whether the statement was made under duress and whether it was retracted lawfully would have no relevance at this stage. - Held that:- We are of the view, in accordance with the view of the High Court, that no substantial question of law arises. Further, though it was vehemently argued by Shri Devansh A. Mohta, learned counsel appearing for the assessee, that this was a case both of perversity and of there being no evidence at all. We find that not only are the findings of fact recorded in some detail but that it is not possible to say that this is a case of no evidence at all inasmuch as evidence in the form of the statement made by the assessee himself and other corroborative material are there on record. - Decided against the assessee.

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• 2015 (9) TMI 1126
  Dis allowance of depreciation - Premium on redemption of debentures - Deduction on restructuring of the term loan - Deduction u/s 36[1](iii) - Held that:- Appeal decided in favour of assessee as decided by this Court in Dy. CIT Bharucha Circle Baroda v. Gujarat Narmada Valley Fertilizers Co. Ltd.[2015 (1) TMI 835 - SUPREME COURT ]. No reason to entertain these Special Leave Petitions, which are, accordingly, dismissed.

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• 2015 (9) TMI 1125
  Validity of Scheme of arrangement between the Petitioner and its Shareholders - Proceedings under Income Tax were pending - Petitioner seeks to make a gift of the shares held by the Petitioner in a Company to its Shareholders - the Petitioner proposes to reduce the balance lying in its Securities Premium Account (“SPA”) by the book value of the Petitioner’s investment in the shares of TAAL as appearing in the books of accounts of the Petitioner on the record date. It is clear from Section 281 of the Income Tax Act that the gift of any asset by an assessee to any person during the pendency of any proceedings under the Income Tax Act will be void as against any claim in respect of any tax or any other sum payable by the assessee as a result of the completion of such proceedings or otherwise. In the present case it is an undisputed position that the above mentioned proceedings under the Income Tax Act are pending against the Petitioner Company. Despite the pendency of these proceedings, by the Scheme the Petitioner proposes to gift its shares in TAAL to its Shareholders. Such a gift would therefore clearly be hit by the provisions of Section 281(1) and would be void as against the claims of the Income Tax Department resulting from the proceedings mentioned above. It is pertinent to note that it is not the case of the Petitioner that the gift of the shares of TAAL would not be void on account of the proviso to Section 281(1). In the circumstances there can be no doubt that the proposed gift of the shares of TAAL by the Petitioner to its Shareholders will defeat the provisions of Section 281(1) of the Income Tax Act. The Petitioner however contends that it has more than sufficient assets to discharge the tax liability in the event that the same crystallizes upon the Petitioner, inasmuch as according to the Petitioner, it has a net worth of Rs. 52 crores as per the book value method and a net worth of Rs. 57 crores as per the market value method post distribution of the shares of TAAL to its Shareholders. In my view, even if this be true, the same does not alter the position with regard to the applicability of Section 281(1). Section 281(1) does not carve out any exception on the basis of sufficiency or otherwise of the assets of the assessee. It will not be proper to permit the Petitioner Company to gift its shares in TAAL to its Shareholders as envisaged under the Scheme. The Court will not put its imprimatur on such a Scheme. - it is clear that the Scheme is illegal and contrary to law and hence cannot be sanctioned by this Court. - Decided against the company.

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• 2015 (9) TMI 1124
  Reopening of assessment - Held that:- As regards the contention that the reassessment based on audit report without independent application of mind by the Assessing Officer is not sustainable, is concerned, do not find any force in the said contention since the respondent has given cogent reasons in his speaking order, dated 12.1.2015 while rejecting the objections raised by the petitioner, for re-opening of the assessment and therefore, it cannot be stated that the respondent has not applied his mind and solely resorted to based on the audit report. In fact, the audit party is entitled to point out a factual error or omission in the assessment and it is settled law that re-opening of the case on the basis of a factual error pointed out by the audit party is permissible under law. It has been held so in the case of “CIT versus P.V.S.Beedis” reported in (1997 (10) TMI 5 - SUPREME Court ), wherein, the Hon’ble Supreme Court has held as under: “The dispute as to whether reopening is permissible after audit party expresses on opinion on a question of law is now being considered by a larger Bench of the Supreme Court. There can be no dispute that the audit party is entitled to point out a factual error or omission in the assessment. Re-opening of the case on the basis of a factual error pointed out by the audit party is permissible under law. ..” In view of above conclusion that the re-opening of the assessment resorted to by the respondent is valid in law, all the other grounds raised on behalf of the petitioner, such as, unabsorbed depreciation of earlier years and carried forward losses can be set off against income computed under Sections 68, 69 and 69A of the Act, applicability of Section 115BBE and parallel proceedings under Sections 154 and 147 cannot be undertaken simultaneously, etc., in my opinion, are the subject matter of the appeal inasmuch as, as against the impugned proceedings, the petitioner is having an efficacious remedy. W.P. dismissed.

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• 2015 (9) TMI 1123
  Extension of time for filing of ITR - Public Interest Litigation (PIL) - maintainability of PIL - Held that:- The period claimed by the petitioner as a matter of right of 180 days for filing the ITR is admittedly not prescribed, neither in the Statute nor in the Rules. According to the counsel for the petitioner also, the same has to be deduced from the scheme of the Act. Unable to gauge any such scheme in the Act assuring 180 days to the assessee for filing the ITR. As already observed above, filing of ITR for assesses due date wherefor is 180 days is dependent upon the accounts of the assessee being audited and which audit the counsel for the petitioner admits commences only on the beginning of assessment year. The said audit, in the case of some assesses may be completed in a few days and in case of others may take longer. Thus, the time taken in audit, which is variable, will be determinative of the time available thereafter for filing the ITR. The said audit is not dependent upon the prescription of the forms for report of the said audit and / or for filing of the ITR. Audit, as per my understanding is to be as per the Guidelines prescribed by the Institute of Chartered Accountants of India and the expectation, even if any for amendment to the form of the Audit Report and /or of the form for filing the ITR is not to interfere with the commencement or completion of the audit and which can by no stretch of imagination be said to be a small task. Experience of life shows that the said audit itself takes the majority of the time, even if can be said to be prescribed of 180 days, for filing of the ITR. Once the audit is complete, in my opinion, the time admittedly available from 29th July, 2015 / 7th August, 2015 to 30th September, 2015 cannot be said to be so small / short which would qualify as unreasonable and in which the Chartered Accountants and the other practitioners of the field cannot be said to be having sufficient time to fill up the forms as per the audit already completed and to file the ITR. It is not as if the Authorities have not applied themselves to the matter. The Authorities concerned, while have extended time for filing of the ITR from the due date of 31st July to 7th September, after having brought out the Notification dated 29th July, 2015 were of the opinion that there was no need for extension of due date of 30th September.It is also significant that the respondents, vide Press Release dated 9th September, 2015 have notified that the date of 30th September will not be extended and have advised the taxpayers to file the returns accordingly. It is thus not as if the respondents have kept the decision in this regard pending till the last date. After 9th September also, sufficient time is available for filing the ITR. The test to be applied in such matters is not of seeing whether the respondents would suffer any prejudice or not, without first being satisfied of the infringement of rights of the petitioner and/or prejudice being caused to the petitioner. If no right is infringed and no prejudice is found to be caused to the petitioner, merely because no prejudice would be caused to the respondents by extending the time for filing the ITR would not be a ground for interfering with the policy decision of the Government and granting such extension. Save for the aforesaid direction, the petition is dismissed.

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• 2015 (9) TMI 1122
  Whether the suit for recovery for the losses caused by the inaction of the respondents in not disposing of the perishable items taken in possession vide deemed seizure order dated 17.10.1995 is maintainable? Whether the appellant is entitled for the damages for the loss suffered by it due to non-disposal of the seized items and kept in deemed possession of the respondents without any rhyme or reason? Whether once it has been found that the items seized by the respondents were perishable and they did not dispose of the same and kept sitting tight over the matter, the appellant is entitled for the damages caused to it due to the inaction of the respondents? - Held that:- The plaintiff has filed suit for recovery of damages caused by the act of income tax authorities. Both the Courts below have given a categorical finding that the appellant has exhausted all the remedies under the Income Tax Act, 1961. The Income Tax Act is a complete Code and no separate suit is maintainable. So, that finding of fact cannot be interfered in regular second appeal. The plaintiff has failed to prove that any illegal raid was conducted by the Income Tax Authorities and he has also failed to prove the damages suffered by him. So, no hesitation in holding that no substantial question of law has arisen in the present regular second appeal. Consequently, the appeal is without any merit and the same stands dismissed.

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• 2015 (9) TMI 1121
  Penalty under Section 271(1)(c) - ITAT deleted penalty - Held that:- Our answer to the question of law raised in this appeal would be that when the Commissioner of Income Tax (Appeals) is satisfied, on the basis of clear and cogent reasonings given in his order, not to levy penalty and when the Tribunal finds such satisfaction on the part of the Commissioner of Income Tax (Appeals) to have been correctly arrived at, the orders do not suffer from any error of law. Therefore, we hold that the Commissioner of Income Tax (Appeals) and the Tribunal were right in ordering deletion of penalty in respect of one item of addition, on the ground that the assessee's explanation was not only bona fide but also substantiated in terms of Explanation (1)(B) of Section 271(1)(iii) of the Act. Hence, the appeal is dismissed. - Decided in favour of assessee.

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• 2015 (9) TMI 1120
  Penalty proceedings under section 271(1)(c) - Held that:- Section 271(1)(c) is attracted in a case where the Assessing Officer is satisfied that any person has concealed the particulars of his income or has furnished incorrect particulars of such income. Once the Assessing Officer has arrived at such a satisfaction, he is entitled to levy, in addition to the tax payable, by way of penalty, the amount indicated in 271 (1)(iii). In addition to this, as provided in the explanation, if the person concerned is not able to substantiate the explanation and fails to prove the bona fides of the explanation and all facts relating to the same and material to the computation of his total income, the amount added or disallowed shall be deemed to be his income. The assessee had also claimed deduction of Rs. 1,84,39,383/-. The Assessing Officer allowed only Rs. 68,02,297/-. The Commissioner (Appeals), after verification of some of the documents produced by the assessee, allowed the claim except to the extent of Rs. 34.65 lakhs. This finding also has become final. Therefore, in view of the aforesaid findings against the assessee, this is a case where clause (c) of section 271(1) providing concealment of the particulars of income or furnishing of inaccurate particulars of such income is attracted. This clearly is a case to which section 271(1)(c) is attracted and the levy of penalty cannot be interfered with. Unable to accept the case of the appellant that the Tribunal committed an illegality in restoring the order of the Assessing Officer. - Decided against assessee.

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• 2015 (9) TMI 1119
  Reopening of assessment - Held that:- In the absence of reasons being furnished, when sought for would make an order passed on reassessment bad in law. The recording of reasons (which has been done in this case) and furnishing of the same has to be strictly complied with as it is a jurisdictional issue. This requirement is very salutary as it not only ensures reopening notices are not lightly issued. Besides in case the same have been issued on some misunderstanding/misconception, the assessee is given an opportunity to point out that the reasons to believe as recorded in the reasons do not warrant reopening before the reassessment proceedings are commenced. The Assessing Officer disposes of these objections and if satisfied with the objections, then the impugned reopening notice under Section 148 of the Act is dropped/withdrawn otherwise it is proceeded with further. In issues such as this, i.e. where jurisdictional issue is involved the same must be strictly complied with by the authority concerned and no question of knowledge being attributed on the basis of implication can arise. We also do not appreciate the stand of the revenue, that the respondent-assessee had asked for reasons recorded only once and therefore seeking to justify non-furnishing of reasons. We expect the state to act more responsibly.

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• 2015 (9) TMI 1118
  Addition made by the A.O. u/s 154 - this amount relates to the amount already declared under the Amnesty Scheme for the A.Y. 1976-77 and 1977-78 and consequently allowed the benefit of set off in the A.Y. 1984-85 - ITAT deleted the addition - Held that:- It was recorded by the Tribunal that the assessee had declared an amount of Rs. 2,40,000/- for the assessment year 1976-77 and Rs. 3,50,000/- for the assessment year 1977-78 under the Amnesty Scheme. It was also noticed that addition of Rs. 3,56,500/- was not required to be separately made as the same could be taken to have been included in the amounts disclosed in earlier assessment years. The Tribunal further recorded that the addition of Rs. 55,000/- also fell within the permissible limit of declaration made by the assessee under the Amnesty Scheme for the assessment years 1976-77 and 1977-78. In such circumstances, we do not find any error in the approach of the Tribunal in upholding the deletion of Rs. 55,000/- in the current year. The finding recorded by the Tribunal was not shown to be erroneous or perverse in any manner which may warrant interference by this Court - Decided against revenue.

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• 2015 (9) TMI 1117
  Treating the gift as unexplained income - whether Tribunal is justified in upholding the addition of Rs. 1,75,000/- received as gift by the appellant from his sister especially considering the fact that an amount of Rs. 5,00,000/- also received as gift from the same sister was allowed to be deducted by accepting the same Income Tax Return and bank Statement? - Held that:- A perusal of the order passed by the Tribunal shows that no cogent and convincing reasons have been given by the Tribunal for not accepting the additional evidence in the form of gift deed and confirming the addition of Rs. 1,75,000/-. Consequently, the matter is remanded back to the Tribunal for deciding it afresh in accordance with law after hearing learned counsel for the parties and taking into consideration the additional evidence produced by the assessee-appellant before the Tribunal.

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• 2015 (9) TMI 1116
  Additional Conveyance allowance - whether is an eligible exemption under section 10(14) in view of circular no.701 dated 20.03.1995 and guideline framed by the CBDTF No.275/11/2001-IT(B) dated 1.02.2001 ? - Held that:- There is no dispute that, as evident from the notification dated 9th June, 1989, any allowance granted to meet the expenditure incurred on conveyance in the performance of duties of office or employment of profit shall qualify for deduction under section 10(14)(i) of the Act only when there is reimbursement of the expenditure actually incurred. Further, as per letter of CBDT dated 1st February, 2001 it is evident that the conveyance allowance and additional conveyance allowance paid to the officers of the LIC are not exempted under section 10(14)(i) of the Act. Since in the instant case there is no evidence that the expenditure was reimbursed and as no notification has been issued for exempting additional conveyance allowance under section 10(14)(i), the Tribunal was not justified in dismissing the appeal filed by the Revenue. Though the CIT (A) in his order had observed that there are some judgements of the ITAT on this issue and though the Tribunal had held that the issue is covered by the orders passed by the Coordinate Benches of the Kolkata Tribunal and of various High Courts, however, but we are constrained to observe that there is no such reference in the orders passed by the CIT(A) and the Tribunal. - Decided against the assessee

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• 2015 (9) TMI 1115
  Disallowance u/s.14A as per Rule 8D - Held that:- With regard to disallowance of interest expenditure made by Assessing Officer u/s.14A specially to invest in Indian subsidiaries. We find that interest free own funds of the assessee is many times more than this investment because interest free funds available with assessee as on March 31, 2006. There is nothing on record to suggest that any direct nexus between interest bearing borrowed funds and investment in Indian subsidiaries. In such facts and circumstances, according to us, no disallowance under Section 14A can be made out on interest expenditure. Assessing Officer is directed accordingly. Regarding direction to Assessing Officer to allocate directors' remuneration fee and traveling allowance towards earning dividend and to make proportionate disallowance under section 14A of the Income-tax Act, 1961, we are of the view that Assessing Officer should make proportionate disallowance only in respect of dividend income from Indian subsidiaries. We do not find any merit in the contention of assessee that no disallowance is called for out of administrative expenditure because dividend income is exempt and hence, proportionate disallowance out of administrative expenses is justified. Accordingly, we do not find any reason to interfere in the order of CIT(A) to that extent. Same is upheld. Allowability of deduction u/s.80IB on interest on FDR and ICD - Held that:- Net interest only should be considered for reducing from profits of business for computing deduction u/s.80-IB and for the purpose of computing net interest, only these expenditure, which are incurred for earning interest income should be considered and reduced from interest income. As a result, main ground is rejected, however assessee's alternative netting interest for the purpose of claiming deduction u/s. 80IB is allowed for statistical purpose as indicated above. Disallowance of sales commission - CIT(A) deleted the addition - Held that:- We find that CIT(A) has given clear finding on the issue that assessee has given evidence that the recipient provided information in respect of services which helped the sales to mature and realise and, therefore, payment of commission was justified and income of all units of assessee is eligible for deduction u/s. 80IB. Therefore, there is no motive to save taxes by paying commission. Thus, we are not inclined to interfere in the finding of CIT(A) who has deleted the addition on account of disallowance of sales commissions paid u/s. 37. Benefit on deduction u/s.80IB on duty drawback - CIT(A) allowed claim - Held that:- t while deciding the appeal for A.Y. 2006-07, the co-ordinate Bench of Tribunal has noted that the duty paid by the assessee and the duty draw back received by it has direct and arithmetic correlation but, in the year under appeal, there is no such finding of either of the lower authorities. In view of the aforesaid facts, we restore the issue back to the file of Assessing Officer to decide the issue afresh in the light of the decision of Tribunal in assessee's own case for earlier years and in accordance with law. The Assessing Officer shall grant adequate opportunity of hearing to the assessee. Thus, this ground of Revenue is allowed for statistical purposes. Levy of penalty u/s. 271(1)(c) - Held that:- Without prejudice to the quantum addition sustained by ITAT, we find that full details of sales commission paid to remissiers alongwith names of corresponding customers to whom windmills were sold and basis of payment of commission were furnished. Assessee has engaged certain prominent parties as remissiers. Further, customers might not be aware that some commission was paid to such remissiers and non awareness of the customer does not fall back of assessee as far as penalty is concerned. In view of this, we find that assessee has furnished all the details. Assessee has neither consciously concealed any income nor has evaded any tax. Hence, in such circumstances, CIT(A) was justified in deleting penalty in question. This view is fortified by the decision of Hon'ble Supreme Court in case of Reliance Petroproducts Pvt. Ltd. reported at (2010 (3) TMI 80 - SUPREME COURT) . In view of above, we are not inclined to interfere with the order of CIT(A) on this point. Penalty on disallowance of claim u/s.80IB in respect of interest on FDR and ICD - Held that:- Tribunal on the issue in the year under consideration, in quantum appeal, held that only net interest should be considered for reduction from profits of business for computing deduction u/s 80IB. With such a direction, the matter has been remitted as discussed above. Since the matter has been remitted, penalty on this ground doesn't survive. In view of above, CIT(A)(A) was justified in deleting penalty. Penalty on account of disallowance u/s.14A - Held that:- CIT(A) has granted partial relief. ITAT has confirmed proportionate disallowance u/s. 14A out of administrative expenses on which penalty has been levied. In view of above, we find that assessee has furnished all the details. Assessee has neither consciously concealed any income nor has evaded any tax. In such circumstances, penalty was rightly deleted by CIT(A) on this account. Further mere disallowance u/s 14A out of administrative expenses cannot be justified penalty u/s 271(1)(c). Same has been rightly deleted by CIT(A). We uphold the same. Lianility to deduct tax at source u/s.196C r.w.s. 115AC on the interest payable on FCCBs - Held that:- interest paid by assessee to nonresident investor is specifically excluded from the deeming provisions as per S.9(1)(v)(b), and therefore, such interest payment cannot be covered in definition of income deemed to accrue or arise in India. It was thus held that since the income in question is falling within the ambit of this exclusion clause of income deemed to accrue or arise in India as per S.9(1)(v)(b), it cannot fall within the ambit of income accrued and arisen in India, and hence, same cannot be said to be covered u/s 5(2) of the Act. Therefore, there was no occasion to deduct tax at source on such remittance. Respectfully following the decision of the coordinate bench of the Tribunal in the case of the Adani (2013 (1) TMI 518 - ITAT AHMEDABAD), which is identical both in terms of the facts and laws relied upon by the Assessing Officer, we hold that since income in question is squarely falling under the exclusion clause of income deemed to accrue or arise in India u/s 9(1)(v)(b) of the Act, it cannot fall within the ambit of income accrued and arisen in India, and hence, the same cannot be said to be covered u/s 5(2) of the Act. Since the recipient non-resident are not taxable on this income in India, there was no obligation to deduct tax at source on such remittance. Hence, assessee cannot be held liable u/s. 201(1)/(1A) of the Act. In view of this legal discussion, this ground of Revenue is dismissed

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• 2015 (9) TMI 1114
  Disllowances towards premium of keyman insurance policies - Held that:- What constitutes a keyman insurance policy under section 10(10D) is not dependent on what is it treated even by the insurer; as long as the assessee is allowed to take life insurance policy on its keymen, as have been undisputedly taken in this case, the same satisfies the requirement of Section 10(10D). What can be sold as a 'life insurance policy' taken by a business entity for its employee, former employee or any other person important for business of such an entity is between the insurance regulator and insurance service provider. However, once it has been sold as a life insurance policy on the keyman to the business, as long as it is in the nature of life insurance policy, whether pure life cover or term cover or a growth or guaranteed return policy, it is eligible for coverage of Section 10(10D). It is not open to us to infer the words which are not there on the statute and then proceed to give life and effect to the same. In view of these detailed discussions, as also bearing in mind entirety of the case, we uphold the grievance of the assessee and delete the impugned disallowance. See case of Suri Sons vs. Addl. CIT [2015 (9) TMI 798 - ITAT AMRITSAR ] - Decided in favour of assessee.

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• 2015 (9) TMI 1113
  Disallowance u/s 14A read with rule 8D - Held that:- AO has made the disallowance u/s 14A and has mechanically followed Rule 8D without pinpointing any expenditure relatable to earning of exempt income. From the details of disallowance made by AO, we find that AO has not made any disallowance on account of interest. We find that Hon’ble Punjab & Haryana High Court in the case of CIT vs. Hero Cycles (2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT) has held that disallowance u/s 14A requires finding of incurring of expenditure and where it is found that for earning exempt income no expenditure was incurred disallowance cannot be made. We find that assessee had debited all expenses related to project under the head “work in progress” and had reduced dividend income from work in progress which means that assessee had not claimed in the P & L account any expenditure for earning of exempt income. The profit and loss account as placed in paper book page 8 do not reflect any expenditure relatable to earning of exempt income. Moreover, we find that assessee had deployed its surplus funds in mutual funds and for investment in mutual funds advisors do not charge any fee and, whatever fee or charges are charged they are deducted from the amount of investment itself. Therefore, also the assessee cannot be said to have incurred any expenditure directly or indirectly for earning of exempt income. Thus we need not refer to sub Rule (2) to Rule 8D of the Rules as conditions mentioned in sub Section (2) to Section 14A of the Act read with sub Rule (1) to Rule 8D of the Rules were not satisfied and the Assessing Officer erred in invoking sub Rule (2) , without elucidating and explaining why the voluntary disallowance made by the assessee was unreasonable and unsatisfactory. We do not find any such satisfaction recorded in the present case by the Assessing Officer, before he invoked sub Rule (2) to Rule 8D of the Rules and made the re-computation. Therefore, the respondent assessee would succeed and the appeal should be dismissed. - Decided in favour of assessee.

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• 2015 (9) TMI 1112
  Disallowance of expenditure under Section 14A applying Rule 8D of the Rules - Held that:- Unless the satisfaction is recorded by the Assessing Officer to the effect that the disallowances offered by the assessee is unsatisfactory, no disallowance can be made under the provisions of Section 14A of the Act. See CIT Vs. Hero Management Services Ltd. [2013 (10) TMI 80 - DELHI HIGH COURT ] - we hereby direct the Assessing Officer to delete the additions made under Section 14A of the Act. - Decided in favour of assessee.

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• 2015 (9) TMI 1111
  Set off of loss - whether CIT(A) erred in law in holding that the appellant is entitled for set off of unabsorbed business loss and depreciation relating to Neora Hydro Limited amalgamated with the assessee? - Held that:- No reason to interfere with the order of ld. CIT(Appeals) and we uphold the same particularly because in the present case assessee had furnished all the particulars regarding steps taken by amalgamating company towards business, as noted in the chart filed by ld. Senior counsel, and, in any view of the matter, business commenced from 8/10/99 when permission was granted by WBSEB. - Decided against revenue. Allowability of interest - Held that:- As decided by assessee's own case assessee has total capital and reserves available at Rs. 140 cr. along with total income assessed by the AO for AY 2006-07 and 2007-08 at Rs. 26.86 cr. and Rs. 43.47 cr. respectively, the assessee has availability of funds interest free more than the interest free advances. Accordingly, we confirm the order of CIT(A) deleting the disallowance. Similar are the facts in AY 2007-08 and hence, taking a consistent view, we delete the disallowance in this year also - Decided against revenue.

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• 2015 (9) TMI 1110
  Disallowance of Expenditure in respect of approvals and permission and Expenditure on removal of squatters - CIT(A) allowed claim - Held that:- As decided in assesee's own case for AY 2007-08 for the relevant assessment year, it is noticed that the AO has changed his stand just because the assessee has transferred the complete rights in the project as a whole to M/s Purearth Infrastructure Ltd. When a particular method of computation of income of the assessee has been followed and has been accepted and is also followed by the revenue and the assessee, just because the total rights in the project has been transferred, such method cannot be changed as by the change of the method, the expenses otherwise allowable to the assessee, is now being denied which is not a permissible act. In these circumstances, we are of the view that the action of the CIT(A) in directing the AO to allow the deduction of the said expenses is on right footing and do not call any interference - Decided in favour of assessee. Addition made u/s 41(1) - payment to Builders and liability for vacation of squatters allowed in assessment years 2004-05 on accrual basis - Held that:- On identical ground for A.Y. 2007-08 the finding of the Tribunal concluded In regard to the issue of disallowance of interest on the loans outstanding from M/s DCM Employees Welfare Trust, it is noticed that the issue is squarely covered by the decision of the Coordinate Bench of this Tribunal in the assessee’s own case for the A.Y. 2003-04 and consequently respectfully following the decision of the Coordinate Bench of this Tribunal in the assessee’s own case for the A.Y. 2003-04, the findings of the ld. CIT(A) on this issue stand upheld. - Decided against revenue. Addition in respect of Sec.14A disallowance - Held that:- In the facts of the present case before us, the assessee has suo mote disallowed expenses under section 14A of the Act. Ld. CIT(A) has not compensated for the deficiency by the A.O in recording proper satisfaction. The ld. CIT(A) has restricted the disallowance to an extent of Rs. 9.79 lacs. The ld. CIT(A) fails to appreciate the reasonableness of expenditure that has been disallowed viz-a-viz the exempt income. In the light of the judgment of Maxopp Investments Ltd. vs. CIT (2011 (11) TMI 267 - Delhi High Court ). We, restrict the disallowance to 10.23 lacs as calculated by the assessee. In view of the aforesaid discussion and on the basis of material and evidence on record, to meet the ends of justice, we find no perversity in the calculation of 14 A, disallowance by the assessee. - Decided in favour of assessee.

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• 2015 (9) TMI 1109
  Reopening of assessment - assessee has claimed depreciation at 5.24 Crores on WDV of 6.32 Crores which is 83% of the WDV - Held that:- On verification of computation of income filed along with return of income as well as perusal of the order indicate that assessee has not claimed any depreciation while claiming only loss incurred in the business. Therefore, question of disallowing the depreciation does not arise. From the table of un-absorbed business loss/depreciation to be carried over, it is evident that the depreciation claimed was only Rs. 61,02,857/- on the part of assets used in the business. Since the disallowance of Rs. 5,70,47,031/- of depreciation does not arise on the facts of the case, we agree with assessee's contentions and direct the AO to delete the addition so made. - Decided in favour of assessee. Disallowances towards advances which include capital goods - Held that:- Assessee pleaded that they were not in the business at that point of time during the period of completion of assessment and now they have restarted the business, they were in a position to furnish the necessary details. In view of that, we are of the opinion that one more opportunity can be given to assessee to substantiate the claims made in the return of income / P&L A/c. Assessee is directed to furnish necessary details to AO and AO to examine whether the amounts can be allowed as write off as per the provisions of the Act.- Decided in favour of assessee for statistical purposes. Treating unsecured loans as income u/s. 68 - Held that:- In the absence of any confirmation for increase in the unsecured loans during the year, both AO and CIT(A) treated the same as the income of assessee. Even though, there is failure on the part of assessee in furnishing necessary confirmations towards increase in unsecured loans, there is nothing on record to indicate that unsecured loans arise either due to fresh credit. It could be due to increase in interest on the existing loans. Therefore, without examining the details, it is not possible to confirm the same just because, assessee could not furnish any details. Here also Ld. Counsel pleaded that assessee can furnish necessary details before the AO. In view of this, this ground is restored to the file of AO to examine the nature of credit and treat accordingly as per the provisions of law and facts - Decided in favour of assessee for statistical purposes. Disallowance of bad debts written off - disallowance of an amount of Rs. 1,69,89,612/- towards bad debts written off - Held that:- Consequent to the decision of the Hon'ble Supreme Court in the case of T.R.F. Ltd Vs. CIT [2010 (2) TMI 211 - SUPREME COURT] , there is no necessity for assessee to justify the bad debts written off. It would be satisfying the provisions, if the amounts are actually written off in the Books of Accounts, being trading nature as irrecoverable. As and when they are recovered, the same are automatically to be taxed under the provisions of Section 41(1). In view of the specific provisions of Section 36(1)(vii), write off of the amount is enough to allow the same. As there is no dispute with reference to the fact that these amounts are not capital in nature, AO is directed to allow the amounts - Decided in favour of assessee

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• 2015 (9) TMI 1108
  Addition u/s. 41(1) as cessation of liability - CIT(A) deleted the addition - Held that:- CIT (A) while deleting the addition has noted that the issue in the present case was covered by the decision of Shri Govindbhai C. Patel vs. DCIT [2009 (10) TMI 637 - ITAT AHMEDABAD]. Before us the Revenue has not brought any contrary binding decision in its support nor could point out any fallacy in the order of CIT (A). We therefore find no reason to interfere with the order of CIT (A). - Decided against revenue. Addition as estimated interest on diversion of funds - CIT(A) deleted the addition - Held that:- CIT (A) while deleting the addition has noted that the conclusion of the A.O. of diversion of funds by the assessee is not supported by facts and has further given a finding that during the year no withdrawals have been made by the partners and neither any loans were taken by the assessee and no effective interest deduction has been claimed by the assessee. Before us, Revenue has not brought any material on record to controvert the findings of the CIT (A). In view of the aforesaid, we find no reason to interfere with the order of the CIT (A) - Decided against revenue.

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• 2015 (9) TMI 1107
  Levy of penalty u/s. 271(1)(c) - contention of the assessee is that when Capital Gains are computed by invoking the provisions of section 50C and the assessee has computed Capital Gains on actual sale price, it is not a case of filing of inaccurate particulars - Held that:- In the present case the assessee has not correctly disclosed the sale consideration in the original return of income. The penalty has not been levied for not adopting market price in accordance with the provisions of section 50C but for not fully and truly disclosing the sale consideration in the return of income. Therefore, the ratio laid down in the case of Commissioner of Income Tax Vs. Madan Theatres Ltd. (2013 (6) TMI 96 - CALCUTTA HIGH COURT ) will not be applicable in the present case. From the appreciation of facts of the case, we are of the considered opinion that the assessee has not fully and truly disclosed all material facts which are necessary for the assessment. The assessee has furnished inaccurate particulars of his income. The assessee in his return of income suppressed the actual sale consideration of land and also the rental income, thus, making him liable for levy of penalty u/s. 271(1)(c) of the Act. - Decided against assessee.

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• 2015 (9) TMI 1106
  TDS Liablity - ‘fees for technical services’ - whether the “Architectural services” rendered by M/s. Andy Fisher Workshop Pte. Ltd., Singapore and “Interior designing and Architectural services” rendered by M/s. FBEYE International Pte. Ltd., Singapore are taxable u/s. 9(1)(vii)(b) of Income Tax Act, 1961 and also under Article 12(iv)(c) of India Singapore DTAA? - Held that:- Where in rendering of any service there is no transfer of technology, technical know-how or any technical knowledge or skill that assessee cannot apply in furtherance of his business objects, the payments for same in our opinion does not fall within the scope of ‘fees for technical services’. Once, the payments are held not to be in the nature of ‘fees for technical’ services there is no point in travelling to the next step to ascertain whether they are exempt in view of DTAA between the two countries or not. Since, we have held that the payments made to Singapore parties are not in the ‘nature of royalties or fees for technical services’, we are of the opinion that no purpose would be served by referring to Article 12 of India-Singapore DTAA to see whether such payments are taxable or exempt. Assessee was not required to deduct tax on the impugned payments - Decided in favour of assessee. Condonation of delay - revenue challenged condoning of delay by Commissioner of Income Tax (Appeals) in filing of appeal u/s. 248 - Held that:- The Commissioner of Income Tax (Appeals) observed that there is no negligence or laxity on part of the assessee in preferring appeal, the delay was caused because of wrong advice given by the professionals. It is a well settled law that condonation of delay should be a rule and denial an exception. It is not the length of delay which matters but the reason for delay in filing of the appeal which is of prime importance. The Courts have been taking liberal view in condoning substantial delay where the delay has been explained. On the other hand, minor delay in filing of the appeal is not pardoned where it has not been sufficiently explained or delay is attributable to utter negligence or lackadaisical attitude of appellant. The Commissioner of Income Tax (Appeals) after taking into consideration the reasons and circumstances causing delay has condoned the delay. We do not deem appropriate to interfere with the same. - Decided against revenue.

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• 2015 (9) TMI 1105
  TDS u/s 194J - satellite right transferred in favor of assessee for a period 99 - Disallowance u/s 40(a)(ia) - mere satellite right without permanently transferring the right to the assessee for a particular period, is subject to deduction of TDS under Section 194J as per revenue - Held that:- The transfer in favour of the assessee for a period 99 years is sale, therefore, it was excluded from the definition of royalty. In this case also, as we have extracted above from the Schedule, the right transferred to the assessee is to telecast the feature film in extra terrestrial areas for a perpetual period of 99 years. As found by the High Court, the copyright subsists only for a period of 60 years. Therefore, the right given to the assessee beyond the period of 60 years has to be treated as sale of the right for cinematographic film. Hence, this Tribunal is of the considered opinion that the decision of this Tribunal in Shri Balaji Communications (2013 (2) TMI 373 - ITAT CHENNAI) may not be applicable to the facts of the case. This Tribunal is of the considered opinion that the judgment of Madras High Court in the case of K. Bhagyalakshmi (2013 (12) TMI 1215 - MADRAS HIGH COURT) would be squarely applicable wherein held that the findings of the First Appellate Authority was perfectly justified in holding that the transfer in favour of the assessee as sale and therefore, excluded from the definition of "Royalty" as defined under clause (v) to Explanation (2) of Section 9(1) of the Act - Decided in favour of assessee.

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• 2015 (9) TMI 1104
  Disallowance being fees paid under Portfolio Management Scheme(PMS) - treated as not deductible expenditure u/s 48(1) of the I.T. Act against Short Term Capital Gain (STCG) computed by the Appellant - Held that:- The issue arising before us is identical to the issue before the Tribunal in assessee's own case and following the same parity of reasoning, we uphold the order of CIT(A) in disallowing the expenditure of PMS, while computing the income from short term capital gains. - Decided against assessee. Disallowance computed under section 14A of the Act read with Rule 8D of the Act - Held that:- The issue arising before us is identical to the issue before the Tribunal in Stock Holding Corporation of India Pvt. Ltd Vs. ACIT (2015 (6) TMI 640 - ITAT MUMBAI). In the facts of the present case also the AO, has failed to record the dissatisfaction that the working of the disallowance made by the assessee against the income exempt from tax, under section 14A of the Act, was incorrect. In view thereof the provision of section 14A(2) of the Act have not been correctly applied by the AO and accordingly we find no merit in the order of the authorities below in this regard.AO at the first instance must examine the disallowance made by the assessee or the claim of the assessee that no expenditure was incurred to earn the exempt income. If the Assessing Officer is not satisfied on this count after making reference to the account, then he is entitle to adopt the method as prescribed i.e. Rule 8D of the Rules. In the absence of said satisfaction being referred by the AO in the present case, we find no merit in the disallowance made by the AO under section 14A of the Act. Accordingly, we delete the disallowance - Decided in favour of assessee. Ad hoc disallowance of 5% made out of various expenses - Held that:- The assessee before us has failed to bring on record any evidence to controvert the finding of the AO/CIT(A) in this regard. Accordingly, we uphold the disallowance of 5% of expenditure out of balance expenses of Rs. 22,29,005/- as expenditure having been incurred in cash and not being supported by proper vouchers and also being incurred for non business purpose. - Decided against assessee. Disallowance of depreciation on residential premises - Held that:- The claim of the assessee was denied by the authorities below in the absence of the particulars of the person having not been provided by the assessee. In all fairness we are of the view that the matter needs to be looked into by the AO, in order to verify claims of the assessee. Following the principles of natural justice we may it fit deem to the restore this issue back to the file of the AO to verify the names of the employees to whom the premises have been allotted and in whose hands the perk has been offered. Reasonable opportunity of hearing shall be afforded to the assessee.- Decided in favour of assessee for statistical purposes. Unaccounted investments - Held that:- The said investments are disclosed by the assessee in its balance sheet which was filed along with the return of income. In the totality of the above said facts and circumstances where the assesee had gathered the information from the Sub-registrar office, which in turn related to the purchase of two different properties by the assessee which was reflected/disclosed in its balance sheet, we find no merit in the addition made in the hands of the assessee on account of undisclosed capital gains. The CIT(A) which has given a finding that the agreement value and the AIR data tally, which has not been controverted by the Ld. DR for the Revenue. We find no merit in the plea of the Revenue in this regard. The evidence filed before the CIT(A) was the balance sheet of the assessee and the agreements which were registered by the Subregistrar, Mumbai which is a Government record. The admission of such evidence by the CIT(A) cannot be said to be in violation of Rule 46A of I.T. Rules.- Decided in favour of assessee

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• 2015 (9) TMI 1103
  Estimation of income @ 8% on contract receipts - CIT(A) deleted the addition - Held that:- As can be seen, only on the basis of TDS certificate enclosed by assessee in the return of income, AO has concluded that the amount received by assessee from LAPPL is a contract receipt and accordingly proceeded to estimate the income. However, as can be seen from the terms of the relevant agreement between assessee and LAPPL, assessee is to receive 15% of the total contract amount as mobilization advance. Though, it may be a fact that in the TDS certificate, deductee has mentioned it as payment towards professional charges but, that itself is not conclusive enough to prove the fact that amount received was not advance but towards work executed. When it is a fact on record that during the impugned AY assessee has only received mobilization advances being 15% of the total contract price and has not raised any bill on the contractee towards a portion of the work executed. Moreover, when assessee has shown the income on the contract work in the succeeding AY, which also includes work-inprogress of 16.22 crores, on which income has been estimated by AO in the impugned AY, in our view, there is no justifiable reason in interfering with the order of ld. CIT(A). In any case of the matter, there is no prejudice caused to revenue as the income assessable on the contract receipt has been offered by assessee for taxation, though, in a different assessment year. - Decided against revenue.

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• 2015 (9) TMI 1102
  Penalty u/s 271E - violating the provisions of section 269SS and Section 269T - Held that:- On a consideration of the entire factual matrix and the judicial precedent thereon in the facts of the present case, we are of the view that there was bonafide belief on the part of the assessee that the transaction with the Directors and the shareholders for meeting urgent cash requirements for running the business would not result in any violations. Considering the peculiar facts and circumstances of the case and the pleadings of the parties before the Bench and the mandate of Section 273B of the Act, we hold that the explanation offered by the assessee company being bonafide constitutes a reasonable cause and being satisfied by the same considering the judicial precedent cited, we accept the same. Accordingly, the impugned orders are set aside in both the appeals and the penalty imposed u/s 271D and 271E accordingly is quashed. - Decided in favour of assessee.

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• 2015 (9) TMI 1101
  Penalty under Sec.271(1)(c) read with section Sec. 250 - Held that:- From the facts of the case, it is apparent that the assessee has not concealed its income or furnished inaccurate particulars in the return of income filed before the Revenue. The excess stock found at the time of search was taken into account for arriving at the income of the assessee during the relevant assessment year as observed by Ld. Assessing Officer in his assessment order. The Ld. CIT (A) also observed in his order that the appellant’s case do not fall under Explanation (3) to Section-271(1)(c) of the Income Tax Act because concealment of income starts only after the return of income was filed or subsequent to filing of belated return of income when the Department detects certain income as escaped. - Decided against revenue.

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• 2015 (9) TMI 1100
  Non deduction of TDS as per the provisions of section 194L/194LA - Held that:- First issue of payment of compensation vis-a-vis TDS under section 194L/194LA of the Act is concerned, the facts on the record show that to implement the scheme of the Government relating to the road widening near the railway tracks, the assessee evacuated the illegal/unauthorised persons in the form of squatters/hutments for which the assessee paid certain compensation to these persons. The fact of the matter is that these occupants were unauthorised and illegal, they were not the real owners of the land, therefore, there is no question of acquiring the land. The land always belonged to the State. It was only the encumbrance which was removed by the assessee by making payment of certain compensation. Therefore, we agree with the learned Commissioner of Income-tax (Appeals) that provisions of section 194L/194LA do not apply to the facts of the case. We confirm the findings of the learned Commissioner of Income-tax (Appeals) on this issue. The appeal filed by the Revenue on this issue is accordingly dismissed. - Decided against revenue. Assessing Officer has applied the provisions of section 194J whereas the assessee has deducted tax under section 194C of the Act - assessment years 2008-09 and 2009-10 - Held that:- We find that the payments have been made by the assessee only in respect of annual maintenance contract which relates to minor repairs, replacement of some spare parts, oiling and greasing of the machinery. In our understanding of the fact, these services do not require any technical expertise and therefore cannot be categorised under the head "Technical services". We, therefore, decline to interfere with the findings of the learned Commissioner of Income-tax (Appeals)deleting the demands of tax under section 201(1) and of interest under section 201(1A) . The appeal filed by the Revenue for this issue is also dismissed - Decided against revenue.

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• Customs

• 2015 (9) TMI 1162
  Levy of anti dumping duty - Provisional assessment - Whether anti-dumping duty imposed with respect to imports made during the period between the expiry of the provisional anti-dumping duty and the imposition of the final anti-dumping duty is legal and valid - Held that:- On a correct reading of the said sub-rule, therefore, the final anti-dumping duty only incorporates the provisional anti-dumping duty within itself, but in the manner provided by Rule 13. Thus, it is clear that such incorporation can only be the period upto which the provisional duty can be levied and not beyond. Thus understood, it is clear that both literally, and in keeping with the object sought to be achieved – that is the making of laws in conformity with the WTO Agreement, there can be no levy of anti-dumping duty in the “gap” or interregnum period between the lapse of the provisional duty and the imposition of the final duty. Such interpretation makes it clear that clause 10.2 of the WTO Agreement is reproduced in the same sense though not in the same form in sub-rule (2)(a). The same result therefore as is envisaged in clause 10.2 is achieved by the said construction – that is anti-dumping duty may be levied retroactively for the period for which provisional measures have been applied. The said construction is in consonance with the principles already laid down earlier in this judgment in that the WTO Agreement is intended to be applied by the various signatory nations in a uniform manner. This can only be done by construing the language of Section 9A read with the Rules in the same sense as that of the WTO Agreement. If Rule 20(2)(a) were to be construed in the fashion suggested by the High Court, it would be ultra vires Section 9A for the reasons already given by us. Further, the object and purpose of Section 9A is to impose an anti-dumping duty in consonance with the WTO Agreement, which Section 9A gives full effect to. These basic points have been missed by the High Court in arriving at the aforesaid finding. Further, the High Court fails to give due importance in its judgment to Rules 13 and 21. We have already seen how Rule 21(1) envisages precisely the situation spoken of by the High Court, and yet states that, in the circumstances mentioned therein, despite dumping and material injury to the domestic industry, differential duty cannot be collected from the importer. In fact, the High Court goes on to say that the expression “imposed and collected” in Rule 21, not being there in Rule 20(2)(a), cannot therefore be imported into the said sub-rule, so that “levied” cannot mean “imposed and collected”. - Decided in favour of assessee.

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• 2015 (9) TMI 1140
  Valuation of goods - Undervaluation of goods - Seizure of goods - Held that:- Revenue was keen on supporting the allegation and based on which the show cause notice came to be issued. Whereas the applicant ¬petitioner before us was not ready and willing to accept the same. If there was no settlement possible, then, the Commission should have relegated the petitioner to adjudication. The petitioner made the choice and if it does not want any settlement by application of mind by an independent commission to all the facets of the matter, then, there is no obligation on the Commission to assist him. We are of the opinion that there is some substance in the contention of Mr. Jetly. However, if the matter cannot be resolved eventually with the assistance of the record available with the Petitioner and the Department and based on which the show cause notice was issued, then, the best course was to relegate the matter to the Adjudicating Authority so as to adjudicate the show cause notice in accordance with law. - petitioner is also agreeable to the Revenue retaining a sum of Rs. 17,61,172/¬ towards duty but without prejudice to the rights and contentions of both sides. - Decided in favour of appellants.

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• 2015 (9) TMI 1139
  Delay in issuance of CHA License - Held that:- Sufficient time has passed from the date the Petitioner's representative or partner has cleared the examination. He may have applied in the requisite form and initially as a Proprietor, but later on we do not find, even if the status is sought to be altered, that this much time and delay was justified. The very purpose of inserting a requirement of passing a written as well as oral examination is defeated, if, within a reasonable time from the candidate being successful thereat, a licence is not issued to him or he is not informed the reasons for not issuing the same. Eventually, these are matters of somebody's livelihood and we expect the authorities to be careful and sensitive. - mandate of Article 14 of the Constitution of India requires the authorities even in such matters to act fairly, reasonable and in a non-discriminatory manner. The Petitioner in the Writ Petition has also indicated as to how the authorities issue licences and after the examinations to several applicants expeditiously. - time of three months as sought by the Respondents cannot be granted - Petition diposed of.

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• 2015 (9) TMI 1138
  Maintainability of petition - Contractual obligations between parties - Alternate remedy - Held that:- Petition is liable to be dismissed on the simple ground that the petitioner has already approached the Principal District Munsif (Vacation) Court, Tuticorin District, seeking for the relief of permanent injunction against the private respondents herein, where, he could not obtain any order. The trial Court has ordered notice on 13.05.2015, which is still pending. Immediately, on 20.06.2015, he approached this Court and got an order of interim stay. It is pertinent to note that either in the Writ Petition or in his subsequent counter affidavit dated 01.06.2015, there is not even a whisper about the suit pending on the very same issue. The petitioner cannot pursue his remedy simultaneously. Therefore, Prima facie, he has not filed this Writ Petition with clean hands - As rightly averred in the counter affidavit of the Customs, if any of the parties prove their claim by producing the original Bill of Lading and other materials to claim the cargo, the authorities are duty bound to release the same, since the goods are perishable in nature. If the owners of the goods is stalled to claim the goods before the Customs authorities, unnecessarily, demurrage charges will be levied by the Customs authorities for no fault of the real owner. - Decided against assessee.

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• 2015 (9) TMI 1137
  Identification of Goods – Matter remanded back for re-examination – Deputy Commissioner in his impugned order held that It has been clearly stated in examination report dated 14.9.2012, that ‘identity of goods could not be established in authentic manner’ however said report states otherwise – Petitioner seeking re-examination of matter by Deputy Commissioner – Held that:- Deputy commissioner directed to re-examine matter – Impugned order hereby set aside with direction upon same Deputy Commissioner to hear petitioner – Also to pass reasoned order in accordance with law – Decided in favour of Assesse.

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• 2015 (9) TMI 1136
  Scope of the remand in earlier round of the litigation - Whether the imported goods could be called ship stores as per the definition under Section 2 (38) of the Customs Act - Import through courier - Import of goods in hand baggage by its employees without declaring the same or by mis-declaring the value - Whether in case of imports made by sea could duty have been demanded from the Appellant - Levy of duty in case of where good were transshipped/re-exported - Evasion of duty - appellant is a service provider to ONGC and was engaged for rendering services such as wireline testing, measurements while drilling, etc. for their offshore oil well drilling operations. Regarding scope of remand - Held that:- the order passed by CESTAT, remanding the matter back to the adjudicating authority cannot be so read so as to limit its scope only to the determination of the effective rate of duty. It is nobody's case that the appellant had before the CESTAT given up on all its other contentions and had confined its case to a dispute only on the quantum of duty demanded and the consequent penalty. In my view unless there is an express conceding of the issue and the legal contentions, which the Tribunal records in its order, it cannot be construed that when the matter has been remanded by finding merit in one of the contentions urged, that, the other contentions stand given up or foregone. - the contention that contention that they were not the importer is required to be examined. Whether the imported goods could be called ship stores as per the definition under Section 2 (38) of the Customs Act - Held that:- The goods imported in the instant case have been taken to offshore locations where the provisions of the Customs Act had not been extended and that the goods after being used there, were brought back to India for being re-exported out of the country. The situation in the present case is squarely covered by provision of Section 54(2) of the Customs Act, wherein it is provided that any goods imported into a Custom Station for transshipment to any place outside India, may be allowed to be transshipped without payment of duty. - consequently no customs duty could have been demanded. Import through courier - duty evasion - Held that:- there is no evidence relied upon which would even suggest let alone establish that Appellant was the consignee of the courier parcels. It is not in dispute that during investigation the investigating officials were able to identify the courier docket number, etc in a few cases yet they chose not to investigate as to who the consignee was as also whether there was any authorization from the appellant in favour of the courier to file the bill of entry. In the absence of these details having been brought on record the demand of customs duty against the Appellant cannot be sustained. Import of goods in hand baggage by its employees without declaring the same or by mis-declaring the value? - Held that:- the demand for customs duty can only be raised against the passenger who was the importer and not against the Appellant. It has been pointed out that here again the demand has been confirmed by the Respondent on the erroneous premise that the Appellant was the owner of the goods. - Appellant is admittedly not the owner of the goods imported and consequently the ratio laid down in the case of Associated Cement Companies Ltd vs CC [2001 (1) TMI 248 - Supreme court of India] does not apply to the facts of the present case. Whether in case of imports made by sea could duty have been demanded from the Appellant? - Held that:- the onus was on the revenue to establish as to who had actually filed the Bill of entry and had taken upon it the mantle of an importer. The Revenue having failed to discharge this burden, it was not open for the Revenue to draw an adverse inference against the Appellant and call upon it to prove the negative. Levy of duty in case of where good were transshipped/re-exported - Held that:- Appellant not being the importer, as also the goods having been transshipped/re-exported, the duty liability could not be fastened upon the Appellant. However I hasten to point out her that the Appellant having time and again, before different authorities accepting that it did not wish to claim refund of the duty paid and that it was contesting the matter only in view of the penalty imposed on it. Given the undertaking made by the Appellant they would not be eligible for refund of the duty deposited by the Appellant even though the same was not recoverable from them, confirmation of duty is erroneous. Reasons assigned by the Respondents for imposing penalty are not sustainable.- no penalty under Section 112 was imposable on the Appellant - Decided in favour of assessee.

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• 2015 (9) TMI 1135
  Imposition of penalty u/s 114A - MEPZ/SEZ unit - DTA clearance - appellant did not carry out sustained exports instead transferred about Rs. 1.62 crores worth of service to DTA without proper intimation to customs authorities and without payment of required duty - appellants cleared printed materials and chromatogram which are research papers are specifically covered under 49011010 of the CTA. Held that:- Appellant having been registered as MEPZ/SEZ unit are covered under rules and regulations of the MEPZ / Customs Rules and Regulations. Even if the goods are exempted the appellants should have followed the procedure for clearing the goods to DTA which apparently they have not done. The appellants have not filed any shipping bill and no intimation was given to the Department and no procedure prescribed for SEZ and customs notifications are followed. They have not only violated FTP regulations for which the Development Commissioner has imposed a penalty of Rs. 5 lakhs but they have also violated the procedure and rules prescribed under the Customs Act. There is enough evidence for imposing penalty under Section 112(a) of the Customs Act, 1962 - appellants are liable for penalty for contravening the procedures prescribed for clearance to DTA. Accordingly, we impose penalty of Rs. 1,00,000 each on the appellants in respect of their appeals. - Decided partly in favour of assessee.

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• 2015 (9) TMI 1134
  Waiver of pre deposit - levy of anti-dumping duty (ADD) - Held that:- As directed by the Tribunal, the Revenue has enhanced the bank guarantee of Rs. 11,84,000/- and the appellant produced copy of T.R. 6 challan. We also take into account the B/E No.5809203 dt. 23.1.2003 has not yet been cleared and is still under the Customs custody and the ADE involved is Rs. 23,91,562/-. Taking into account the live consignment which is still pending with the Customs the balance demand comes to approx. Rs. 80 lakhs against which by way of encashment of bank guarantee and also by payment of Rs. 20 lakhs appellants paid Rs. 31,84,000/. Taking into consideration the payments made, we direct the appellant No.1 to pre-deposit further amount of Rs. 40,00,000/- (Rupees Forty lakhs only) within 6 weeks. The payment of Rs. 31,84,000/- amount already paid by the appellants to be adjusted towards predeposit. Upon deposit of the said amount, predeposit of balance duty and penalty in respect of the appellant No.1 and predeposit of penalty amount on the appellants No.2 & 3 shall stand waived and recovery thereof stayed during pendency of the appeal. - partial Stay granted.

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• 2015 (9) TMI 1133
  Restoration of appeal - non-compliance of stay Order - Held that:- On perusal of records and considering the medical certificate, technical difficulties of making the payment of predeposit after mobilising the funds and also considering the fact since the appellant has complied with predeposit on 19.2.2015, the compliance is noted. The dismissal order of appeal is recalled and the appeal is restored to its original number - Appeal restored.

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• 2015 (9) TMI 1132
  Imposition of redemption fine - import of Limestone Blocks -imported goods were not covered by the license - Held that:- Adjudicating Authority had given a detail finding to impose penalty and fine. We find from the impugned order that the appellant vide a letter Dated 09.10.2007 interalia submitted that they are regularly importing Limestone Blocks against a specific licence. However, now their licence has been expired and so they were not able to utilize the same. They have submitted documents in support of the contention. It is seen that the said letter was not considered by the adjudicating authority. In our considered view, the appellant should be given an opportunity to represent their case before the Adjudicating Authority in the interest of Justice. - Matter remanded back - Decided in favour of assessee.

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• Corporate Laws

• 2015 (9) TMI 1131
  Maintainability of petition for recovery suit by the company who was not exiting at the time of filing of suit - That the present petition was filed as on 3.4.2010. That the petitioner's status as a corporation stood voided, on account of non payment of taxes, under the Delaware Code applicable in the State of its incorporation, in the United States of America, as on 1.3.2010. And that it stood renewed and revived by a certificate of revival dated 2.8.2011. The point that would arise for consideration is therefore, whether the petition could have been entertained as on 3.4.2010, by this court. Held that:- The petitioner was not in existence as on the date of institution. The petition was hence not maintainable. It is not a case where the petition had been instituted before the certificate of incorporation was forfeited, whereby it could be claimed that the petition could be revived immediately after the certificate of incorporation was revived, though by a deeming fiction the corporation ceased to exist, temporarily. It was also possible for the petitioner to have instituted fresh proceedings on a revival, after the initial forfeiture of the certificate of incorporation. The petition which was infirm on the date of filing cannot be resuscitated on the basis of a subsequent event, to the prejudice of the respondent. The petitioner would also be disentitled to claim that any such relief be moulded in its favour, to avoid multiplicity of proceedings or such other hardship, on account of the petitioner not having stated the actual state of affairs as on the date of filing of the petition, which the respondent has brought to light subsequently. The petitioner seeking to take this impropriety in its stride and to glibly seek to defend its position is hardly appreciable. - Petition dismissed.

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• 2015 (9) TMI 1130
  Monopolies and Restrictive Trade Practices - Booking of cars - three complaints were made before the Commission by persons who claimed that they had intentions to make the booking but were dissuaded by the high quantum of deposit required for the purpose. Their specific objection was that the demanded amount exceeded the basic price of the car if cess, taxes and transportation cost were left out. According to the complainants the appellant had indulged in Unfair Trade Practice (UTP) by demanding an excessive amount for bookings of Indica cars and by including the likely taxes, cess and transportation cost. Held that:- The Commission noticed the relevant facts including provision for interest while narrating the facts, but failed to take note of this crucial aspect while discussing the relevant materials for the purpose of arriving at its conclusions. Such consideration and discussion begins from paragraph 32 onwards but without ever indicating that the booking amounts had to be refunded within a short time or else it was to carry interest at the rate of 10% per annum. The order of the Commission appears to be largely influenced by a conclusion that the appellant should not have asked for deposit of an amount above the basic price because in the opinion of the Commission it was unfair for the appellants to keep excise and sales tax with itself for any period of time. Such conclusion of the Commission is based only upon subjective considerations of fairness and do not pass the objective test of law as per precise definitions under Section 36A of the Act. Even after stretching the allegations and facts to a considerable extent in favour of respondent Commission, we are unable to sustain the Commission’s conclusions that the allegations and materials against the appellant make out a case of unfair trade practice against the appellant. Nor there is any scope to pass order under Section 36-D(1) of the Act when no case of any unfair trade practice is made out. - Decided in favor of appellant.

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• Service Tax

• 2015 (9) TMI 1161
  Denial of CENVAT Credit - outward transportation - whether during the period from 7/2006 to 3/2007 Cenvat Credit is admissible on service of outward transportation - appellant charged transportation charges in the sale bill from their customer. - Held that:- By the amendment made with effect from 1st April, 2008 substituting the word "from" by the word "upto" all that has been done is to clarify the issue. Neither the services rendered to the customer for the purpose of delivering the goods at the destination was covered by the definition of input service prior to 1st April, 2008, nor is the same covered after 1st April, 2008. If the definition provided in Section 2(l)(ii) is read as a whole, it would appear that outward transportation charges or taxes paid in regard thereto is claimable only with regard to those transports which were made from one place of removal to another place of removal. Decision in the case of ABB Vs. CCE [2009 (5) TMI 48 - CESTAT, BANGALORE] which was upheld by the Hon ble Karnataka High Court reported in [2011 (3) TMI 248 - KARNATAKA HIGH COURT] distinguished. Decisions in the case of CCE vs. Vesuvious India Ltd [2013 (12) TMI 1025 - CALCUTTA HIGH COURT] and India Japan Lighting Private Ltd. [2009 (7) TMI 1217 - MADRAS HIGH COURT] and Lafarge India Ltd. vs. CCE [2014 (10) TMI 297 - CHHATTISGARH HIGH COURT] and CCE vs. Lumino Industries Ltd. [2014 (1) TMI 1424 - CALCUTTA HIGH COURT] followed. - Credit disallowed - Decided against assessee.

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• 2015 (9) TMI 1160
  CENVAT Credit - input services - mobile phone services - Outward Transport Services - Held that:- Credit on GTA allowed - So far as the Cenvat credit claim on availing of mobile phone services is concerned, there is no material on record to suggest that the mobile phones were no way related to the manufacture or in relation to manufacture or for the activities permitted by Rule 2 (l) of Cenvat Credit Rules, 2004. Therefore, assessee succeeds on this count. So far as denial of Cenvat credit on the services used with the documents addressed to Head Office is concerned, there appears no material to suggest that particular services was not used for the purpose stated in Rule 2 (l) of the Cenvat Credit Rules, 2004. Therefore, the claim thereon is allowed. - Decided in favour of assessee.

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• 2015 (9) TMI 1159
  Denial of CENVAT Credit - whether appellant is entitled to avail Cenvat Credit on inputs and capital goods used exclusively for R & D and Quality Control Laboratory situated inside the factory premises - Held that:- Appellant is using the Laboratory for carrying out tests regarding necessary colour texture to the plastic granule as per specifications and requirements of the customers, to match the specifications as per global norms and also for developing new products for the customers etc. Appellant will have to meet the specifications of the customers, before the products are manufactured and cleared on payment of duty, by suitable tests and norm fixation. Such an activity in R&D and Quality Control Laboratory is essential for manufacture of finished goods and has to be held as in relation to manufacture of excisable goods and will be eligible to Cenvat Credit under CCR. - Decided in favour of assessee.

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• 2015 (9) TMI 1158
  Admissibility Cenvat Credit - input services - Pest Control Services, Construction of Residential Services, Architect Services and Security Services - these services availed either in their factory premises or in the Residential Colonies given by the appellants to its employees - Held that:- Services were Availed by the appellant in their factory or the residential colony situated at a far off places close to their factory. Appellant has mainly relied upon the Case Law of Andhra Pradesh High Court in Commissioner of Customs and Central Excise, Hyderabad-III and ITC Limited [2011 (11) TMI 516 - ANDHRA PRADESH HIGH COURT], where Cenvat Credit of Several Services, like; lawn moving, garbage clearing, maintenance of Swimming Pool, collection of household garbage, harvest cutting, weeding, etc; used in maintaining staff colony was upheld. - In view of the ratio laid in the above case law appeals filed by the appellant are allowed - Decided in favour of assessee.

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• 2015 (9) TMI 1157
  Validity of impugned order - Cargo handling service or manpower recruitment or supply service - Violation of principle of natural justice - Held that:- Adjudicating authority did not even devote a single sentence to analyze the service rendered by the appellant with a view to arriving at a finding that the said service fell under the category of cargo handling service. Thus, we find the orders-in-original nonspeaking; that apart, the appellants' contention that they had not received any show cause notice has also not been dealt within is the impugned order-in-appeal and if true, the orders-in-original / the impugned orders-in-appeal would be liable to be set- aside as having been issued in violation of the principles of natural Justice. - Matter remanded back - Decided in favour of assessee.

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• 2015 (9) TMI 1156
  Denial of refund claim - input service - GTA Service used for export of goods - the appellant failed to submit any proof to establish any nexus between the inputs and the fact of the goods exported and that essential conditions for availment of refund under Notification No.17/2009-ST were not fulfilled - Held that:- In the light of the concurrent finding of facts recorded by the authorities below, the claim by the appellant reiterated before this Tribunal, that the invoices submitted and that the refund claim contained details of the bills of lading which are essential documents of proof of export setting out the export invoices and container numbers and that photocopies of invoice/debit notes which were filed certified that the specific services were received regarding export of goods and that service tax was remitted and these should have been considered as substantial compliance with Notification No.17/209-ST, does not commend acceptance. - Decided against assessee.

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• 2015 (9) TMI 1155
  Denial of refund claim - input services of technical testing and analysis service used in relation of export of goods - Revenue has contended that weighment, sampling and stuffing of containers is not covered within the scope of technical testing and analysis service. - Held that:- Physical testing and analysis would clearly include weighment and sampling also is based on certain physical or chemical characteristics. - for determination of the specifications of protein, fat moisture etc. samples were required to be drawn mixed and then analysed. Indeed, we find that the service providers issued proper certificates certifying weighing, packing and stuffing and the specification of protein, fat, moisture etc. - refund of the amounts was correctly sanctioned as per the provisions of Notification No. 41/2007-ST dated 6.10.2007 as amended. Thus, the impugned order does not suffer from any infirmity - Decided against Revenue.

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• Central Excise

• 2015 (9) TMI 1152
  Classification of (1) Dipped Tyre Cord Warp Sheet and (2) Rubberised Tyre Cord Warp Sheet - Classification under Chapter Heading 4005.90 or under Chapter Heading 5902.10 - Commissioner (Appeals) allowed the appeal on the ground that the case was covered by the judgment of the Tribunal in 'MRF Ltd. v. CCE, Goa & Chennai' [1998 (7) TMI 230 - CEGAT, MADRAS] - CESTAT upheld the order observing that the aforesaid judgment of the Tribunal has been upheld by this court in 'CCE, Goa & Chennai v. MRF Ltd.' [2005 (1) TMI 110 - SUPREME COURT OF INDIA]. - Held that:- observations of the CESTAT are incorrect inasmuch as this Court in MRF case (supra) had remitted the case back to the Commissioner and had not decided the appeal in favour of the assessee. Be that as it may, we are of the opinion that in the instant case, it is not even necessary to remit the case back because of the reason that the classification as made by the Department has been accepted by the assessee and the assessee is even paying the duty on the basis of the said classification. - Decided in favour of revenue.

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• 2015 (9) TMI 1151
  Clandestine manufacture and removal of goods - Confiscation of goods - Whether the decision of the Customs, Excise and Service Tax Appellate Tribunal upholding demand of Rs. 58,54,825/- and confiscation of 24 air-conditioners along with duty and penalty demand of Rs. 3,16,800/- is perverse and contrary to the facts on record - Held that:- There is no attempt made by the Department to substantiate the allegation of manufacture of as many as 606 ACs by the Appellant. No evidence has been produced to show that the basic raw materials required for manufacturing such a large number of ACs was procured by the Appellant. - impugned majority order of the CESTAT on the issue of clandestine removal of 606 ACs by the Appellant without payment of duty suffers from serious errors and, therefore, cannot be sustained in law. - Court is not inclined to consider the plea of the Respondent that the matter should be remanded for a fresh consideration by the CESTAT. In the first place, it must be remembered that the search operation in this case took place way back in 1992. The long drawn process of adjudication over a period of 12 years was followed by the judicial review process for another 10 years. Sending the case back to the CESTAT for a fresh determination would prolong the case interminably. The question of now producing persons whose statements were recorded 23 years after the event for cross-examination is impractical and not feasible. Secondly, no fresh material has to be brought on record to warrant a re-look. The Court is satisfied that the existing material is insufficient to sustain the adjudication order of the CCE on the issue. Court set asides the impugned majority order of the CESTAT on the issue concerning the alleged clandestine removal of the 606 ACs by the Appellant and hereby quashes the corresponding demand - Court in regard to the removal of 606 ACs is accordingly answered in favour of the Assessee and against the Revenue. - impugned majority order of the CESTAT as regards the issue of the clandestine removal of 24 ACs with the corresponding duty demand of Rs. 3,16,800 is hereby affirmed. - Decided partly in favour of assessee.

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• 2015 (9) TMI 1150
  Housing of CESTAT Bench at Allahabad - Transfer of case from CESTAT Delhi to CESTAT Allahabad - Regional Bench of the Tribunal at Allahabad will start functioning in a regular manner with effect from 01.09.2015 onwards. As a consequence thereof all the appeals, which are pending before the Tribunal at New Delhi relating to the State of Uttar Pradesh will stand automatically transfered to the regional Bench at Allahabad. It also follows that the filing of fresh appeals will now be made at Allahabad from 01.09.2015 onwards. We, consequently, direct the Registrar, Tribunal to ensure that notices are sent to the parties in pending appeals intimating them about the transfer of their appeals to the regional Bench at Allahabad. The Registrar, Tribunal will issue an advertisement in the leading newspapers, which has a circulation in Delhi as well as in the State of Uttar Pradesh published in English and Hindi within 10 days from today intimating the public about the transfer of the pending appeals to the regional Bench at Allahabad and also with regard to the filing of fresh appeals under Central Excise Act, Customs Tariff Act, Finance Act and all other relevant laws with effect from 01.09.2015 onwards. Notification dated 14.08.2015 makes it apparently clear that the regional Bench of Tribunal at Allahabad will start functioning from 01.09.2015. It necessarily means that not only registry of the Tribunal will start functioning at Allahabad from 01.09.2015, but the judicial functioning of the tribunal would also commence at Allahabad w.e.f. 01.09.2015. The Court has however, been informed that for the month of September, 2015 the Bench will function from 14.09.2015 to 18.09.2015 since previous notices have already been sent by the Tribunal. We, accordingly, permit the Tribunal to function for the period 14.09.2015 to 18.09.2015. However, from the month of October, 2015 the Tribunal should function on a regular basis and not one week in a month, as directed by the Court earlier.

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• 2015 (9) TMI 1149
  Reward for disclosure of evasion of duty - Held that:- Petitioner was an employee of the said organization and he had given certain information regarding violation of the statutory provisions, by which, according to him, the company was not paying the excise duty for certain items, which were being manufactured in the company. According to the petitioner, it is pursuant to the said information that the Excise Department had conducted enquiry and taken appropriate steps in the matter. However, petitioner was dissatisfied with the orders passed by CESTAT in so far as according to him, the entire evasion has not been brought to the notice of the authorities concerned and the enquiry was not satisfactory. - Committee had gone into the claim of the petitioner and Annexure R1(a) minutes produced by the respondent authorities clearly indicates that the entire factual circumstances involved in the matter including the fact that the petitioner was the informer, who has given necessary information regarding the evasion, was taken into consideration and it was found that, as per the guidelines, it is possible for the Department to grant an ex-gratia payment and Rs. 5,00,000/- was fixed as the ex-gratia amount. Under such circumstances, we do not think that we will be justified in interfering with the said finding of the Committee at this stage of the proceedings. - No prima facie case in favour of assessee - Decided against appellant.

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• 2015 (9) TMI 1148
  SSI exemption - production of pharmaceuticals as recorded in the RG1 register was not tallying with the production recorded in the laboratory reports - Duty demand u/s 11D - Held that:- Commissioner has assumed that in respect of all the clearances, the appellant has collected Excise Duty. If the department makes the allegation that the appellant had collected money representing Excise Duty, then the burden is on the Revenue to prove the same. In view of this position, the Order-in-Original has no merits. We set aside the same but remand the entire matter to the original authority to decide the case de novo after giving an opportunity to the appellant and after observing the principles of natural justice. The de novo order should be decided within four months from the date of this order. As could be seen from the order of the Tribunal, it is clear that the entire burden of proving that the respondent-assessee has collected money representing excise duty rests on the Revenue, but the order-in-original does not disclose that the Department has discharged the burden of proof, as such, the Tribunal was right in remanding the matter to the original authority to reconsider and decide the case on merits. Further, it is to be noticed that during the pendency of this appeal, the respondent-assessee is said to have paid certain amounts which fact is not denied by the Department. Further, in the Order-in-Original itself, the Commissioner had recorded that there is no direct evidence available on record except that certain sale invoices were raised against M/s. A.P.H.M.H.I.D.C. and certain amounts were shown as excise duty. That apart, so far as the invoices raised against M/s. A.P.H.M.H.I.D.C. are concerned, the respondent-assessee paid a sum of Rs. 3.00 lakhs and Rs. 4.50 lakhs vide their branch Challan Nos.04/2003-04 and 05/2003-04 dated 11.02.2004 through State Bank of India and this fact has not been controverted by the Department. - Decided against Revenue.

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• 2015 (9) TMI 1147
  Availment of CENVAT Credit - fraudulent passing of CENVAT Credit to different buyers - Held that:- Appellant admitted that they have wrongly availed CENVAT credit on the basis of invoices without receipt of the goods, and, therefore, imposition of penalty of equal amount of duty, under Section 11AC of Central Excise Act, 1944 is warranted. Regarding the imposition of penalty on the Appellant No.2, the learned Advocate submitted that the Appellant No.2 appeared before the Central Excise Officers and supplied the documents time to time. They had paid duty at the instance of the officers. There is no material available, he had knowledge of the alleged irregularity. We have already stated above that the denial of CENVAT credit on inputs availed on the basis of invoices showing Auto Rickshaw is justified and therefore, the imposition of penalty on the Appellant No.2 is required to be re-examined. - demand of CENVAT Credit alongwith interest and penalties on the Appellant Company to the extent of CENVAT Credit availed on the basis of invoices as mentioned in the Annexure I to the Show Cause Notice, other than vehicle numbers mentioned Auto Rickshaws, are set aside - Matter remanded back - Decided partly in favour of assessee.

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• 2015 (9) TMI 1146
  Applicability of Rule 8 (3A) - payment of excise duty on consignment basis - Held that:- High Court in the case of Malladi Drugs & Pharmaceuticals Ltd. - [2015 (5) TMI 603 - MADRAS HIGH COURT] struck down the Rule 8(3A) as ultra vires. - Tribunal in a batch of appeals in the case of Cheran Cements Ltd. & Others Vs CCE Trichy [2015 (8) TMI 99 - CESTAT CHENNAI] following the Hon'ble High Court's order (supra) allowed the assessee's appeals and rejected the revenue's appeals. In view of High Court's order (supra) and this Tribunal orders, the order of the adjudicating authority is set aside - Decided in favour of assessee.

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• 2015 (9) TMI 1145
  Denial of concession under Notification No. 108/95-CE dated 28.08.1995 - supplies were made for the project financed by the International Development Association - Held that:- International Development Association is part of the World Bank (International Bank for Re-construction and Development). The said Bank has been given privileges in terms of Section 3 of the United Nations (Privileges And Immunities) Act, 1947 - Decided against Revenue.

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• 2015 (9) TMI 1144
  Denial of concessional rate of duty - whether or not the assessee is eligible for concession under Notification No. 9/98-CE dated 02/06/1998 - Held that:- The concessional rate of duty as per Notification No. 9/98-CE dated 02/06/98 has been undisputedly claimed by the respondent in their classification declaration effective from 01/7/98. The respondent paying full rate thereafter by itself cannot be considered as an act which will make the earlier declaration legally ineffective as argued by Department. No such presumption can be made without legal basis. - Decided against Revenue.

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• 2015 (9) TMI 1143
  Imposition of penalty - Job worker - Held that:- Tribunal in similar matter has already set aside the very same impugned order and set aside the demand and penalty against M/s.Global Repackers, the principal manufacturer [2006 (7) TMI 432 - CESTAT, CHENNAI] - In view of the factual position that the Tribunal has set aside the order & demand and penalty on the main appellant, the imposition of penalty on the co-noticee is liable to be set aside - Decided in favour of assessee.

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• 2015 (9) TMI 1142
  100% EOU - Denial of refund claim - Refund of unutilized CENVAT Credit - DTA Clearances of waste and scrap - Held that:- Refund claim of Rs. 10,02,301 filed by the appellant under Rule-5 of CCR was sanctioned by the Adjudicating Authority under OIO Dated 26/05/2008. However, on departmental review the same was set aside by the first appellate authority against which the present appeal is filed. The only grounds taken by the first appellate authority is that unutilized credit could have been utilized for DTA clearances being made by the appellant. However, there is no such restriction under Rule-5 of CCR and he refund notification issued there under .It is apparent from the case records that certain waste/rejects of the Yarn and Fabrics are only cleared in DTA which cannot be exported. If the stand of the department is accepted then no refund will be admissible to an exporter because every manufacture will result into generation of some waste and scrap which has to be cleared in DTA - Decided in favour of assessee.

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• 2015 (9) TMI 1141
  Admissibility of CENVAT Credit - Credit availed on the Furnace Oil which is used in the generation of steam which is partly supplied to appellant - Held that:- As the issue involved has already been remanded back to the Adjudicating Authority by this bench under Order [2014 (9) TMI 686 - CESTAT AHMEDABAD] the present case is also required to be remanded to the Adjudicating Authority for ascertaining the same facts - Matter remanded back - Decided in favour of assessee.

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• CST, VAT & Sales Tax

• 2015 (9) TMI 1154
  Levy of penalty - sales tax was paid belatedly, i.e., beyond the month in which it fell due - Andhra Pradesh General Sales Tax Act, 1957 - delay in payment of sales tax due to financial problems - Held that:- It is not necessary for us, in the present proceedings, to examine whether or not imposition of penalty under section 15(4)(a) of the Act is mandatory or whether the competent authority has the discretion not to impose penalty even in cases of violation of the said provision. We shall proceed on the premise that exercise of power under section 15(4)(a) of the Act, which requires an amount equal to tax to be levied as penalty where a dealer has charged tax from the purchaser, is discretionary. The assessing authority and the appellate authority/Tribunal have noted that the petitioner was irregular in payment of sales tax dues even in the earlier months of the year. While no penalty was levied on the earlier months, the fact that the petitioner was regularly delaying payment of tax was taken into consideration in imposing penalty on him for the subject month. The previous conduct of the dealer is not an irrelevant factor in deciding whether or not penalty should be imposed on a dealer. We may not be understood to have held that in all cases where penalty is imposed, the previous conduct of the dealer should be taken into consideration. All that we have held is that the authority cannot be said to have acted illegally if, while exercising his discretion to impose penalty, he has taken the previous defaults of the dealer, in making belated payment of tax to the State, into consideration. Section 16(3) of the APGST Act requires the dealer to pay interest, at the stipulated rate, for belated payment of tax, penalty or any other amount due under the Act. Interest is levied for the period of the delay. The very fact that interest is also levied for belated payment of the penalty amount, goes to show that levy of "interest" is not in substitution of the penalty which can be imposed under section 15(4) of the Act. The petitioner's contention that, as interest is leviable under section 16(3) of the Act, penalty should not be imposed under section 15(4)(a) of the Act is, therefore, not tenable. - Petition dismissed - Decided against the assessee.

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• 2015 (9) TMI 1153
  Attachment of bank accounts provisionally - alleged huge tax liability - dispute is related to rate of tax on rigid frame steel structures - There was no dispute with the Revenue until the financial year 2010-2011. The Petitioner thereafter relying upon a judgment of the Rajasthan High Court started charging VAT at the rate of 5% and not 12.5% on rafters and rigid frame columns. - Held that:- Learned Senior counsel for the Petitioner, on instructions, states that the Petitioner is ready and willing to make a statement that unless and until the proceedings under the Act including an Appeal preferred by the Petitioner is disposed of, it would not create any third party right, part with possession of the assets and properties including the above plant and machinery and building. However, that should not prevent the Petitioner from utilizing the same in the ordinary and normal course of business. We are of the opinion that the statements made by the learned Senior Counsel, on instructions, are enough to protect the interest of the revenue at this stage. There is no need of continuing the provisional attachment ordered by the Joint Commissioner vide Exhibit-A to the Petition. By accepting the statement made by the learned Senior Counsel as an undertaking given to the Court and directing that movable and immovable Assets and properties of the Petitioner shall not be disposed of, transferred and no third party interest of any nature created therein nor their possession shall be parted with during the pendency of the proceedings under MVAT Act, 2002, as noted above, we set aside the impugned order. Ordered accordingly. - The bank accounts and which are the subject matter of the provisional attachment order are forthwith released and defreezed. - Decided in favor of assessee.

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• Indian Laws

• 2015 (9) TMI 1129
  RTI - Missing public records - The case in hand is a classic example, as to how the Government officers for protecting their fellow officers tend to frustrate the basic intention of the legislature behind the enactment of the Right to Information Act, 2005. Section 9 of the Maharashtra Public Records Act clearly mandates that whoever contravenes the provisions of Section 4 or Section 8 of the said Act shall be punishable with imprisonment for a term which may extend to five years or with fine which may extend to ten thousand rupees or with both. Taking into consideration the directions given by the State Information Commission, it was mandatory firstly for Mr. Suresh Kakani and secondly for Mr. S.K. Salimath to set criminal law in motion and leave it to the investigating agency to find out the culprits. In view of the clear direction issued by the Second Appellate Authority, they were bound to set criminal law in motion as the documents could not be traced within the stipulated time. State directed to pay cost of Rs. 15,000/- to the Petitioner.

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• 2015 (9) TMI 1128
  Vessel was berthed at the Chennai Port Trust - whether, the Chennai Port Trust, the appellant herein, is entitled to levy berth hire charges as applicable to commercial vehicles or the charges leviable in the case of dead vessel meant for scrapping - Held that:- the appellant has not been in a position to show, by sufficient evidence, that the vessel in question, namely, MV “San Giorgio 1” , is not a dead vessel. Further, the amount payable in respect of the vessel MV “San Giorgio 1” cannot be based on the rates applicable to commercial vehicles. The fact the vessel in question is a dead vessel cannot be questioned. As the appellant had not been in a position to show that the berth hire charges applicable to the vessel MV “San Giorgio 1” has been notified by the Berth Authority for Major Ports and made applicable in respect of the Chennai Port Trust, the claim of the appellant cannot be sustained. From the records available it could be seen that the Chennai Port Trust has been adopting the rates fixed by the Vishakapattinam Port Trust, in respect of the dead vessels. There is nothing on record to show that the rates had been revised in respect of the dead vessels, berthed at the Chennai Port Trust, by way of a notification issued by the Berth Authority for Major Ports. Therefore, the contentions raised on behalf of the appellant, with regard to the berth hire charges, in respect of the vessel MV “San Giorgio 1”, cannot be countenanced. However, it may be open to the appellant to make its claim, if any, for the payment of the additional hire charges, from the respondent, in respect of the vessel, by following the procedures contemplated under the provisions of the Major Port Trusts Act, 1963, before the appropriate authority or forum. Writ petition dismissed - Decided against the appellant.

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